Palmerston is disposed to give them trouble, and that the bond-holders are pressing that something decisive should be done in their behalf. If the government shall entertain any serious fears in regard to the matter, they would likely open the subject, and thus enable me to bring forward a formal proposition to treat for a cession. I deem it, therefore, the better policy to suffer the thing to rest as it is for the present. The court will remain here for some weeks, when I shall have the opportunity of meeting the ministers in an informal way, without attracting that attention which our official visits in Madrid would likely excite. Besides, I can, at my discretion, as the matter now stands, renew the subject with the new Secretary, which I shall most certainly do should I discover the least grounds to suspect that they are laboring under any misapprehension as to my conversation with General Nar vaez. Mr. Pidal belongs to the French party-is strongly prejudiced against the English, and will warmly second General Narvaez on that point. He was Secretary of War at the time of the Queen's marriage-is the brother-in-law of Mon, who was the Minister of Finance at the time, and the great co-laborer of Count Bresson in support of the Montpensier marriage. Still he is strongly Spanish in his feelings and character, and not likely to join in promoting an act calculated to shock the national pride. On the other hand, he is a bold, rough, independent man, and would fearlessly carry out any measure he might undertake. Of the Queen Mother I have already spoken, so that you have a pretty accurate idea of the persons with whom I have to deal, and of the probability of success. You will naturally inquire if the state of the finances is to have no effect on the question. With an empty treasury and the expenses daily increasing-with the credit of the government so far reduced as to be driven to the necessity of resorting to a forced loan to raise the small sum of five millions, one would suppose such a state of things as this would be the first consideration with those charged with the administration of the government. But, unfortu nately, such is the desperate state of the finances, and of the public debt, that all seem to despair of correcting them. The foreign debt is estimated at four hundred millions of dollars, of which the agent of the English creditors claims two hundred and fifty millions. Of the domestic debt, what is the amount, no one seems to know: 'tis said even the government keeps no account of it; or if it does, will not let it be known. It is stated at three hundred millions three per cent., exchangeable for certain kinds of public property. Mr. Henderson is still at Madrid, acting as agent of the bond-holders, and boasts of occasionally receiving a note of promise from General Narvaez. The fact is, I expect he is merely kept there for appearances. I do not see how they can well meet the heavy demands on the treasury, even if so disposed. Certainly they cannot, without that radical reform which no ministry has the resolution to undertake. The average receipts for the last four or five years have been sixty-five millions of dollars, and the expenditures seventy millions. The army is computed at one hundred and fifty thousand in the Peninsula, fifteen or twenty thousand for Cuba, and fifteen thousand for the other colonies. As matters now stand, when the country is governed by the bayonet, there is little prospect of a reduction. The government places a much higher estimate on the revenues of Cuba than you seem to calculate. They place it at twelve millions of dollars, and after deducting the expenses of the civil and military, claim for the treasury six millions. Besides this, the orders or rents on the treasury, pay to the navy, and employment to persons who would be entitled to retiring pensions at home, together with the profits from the flour monopoly, make, according to the estimate here, some fifteen or twenty millions annually. I doubt, therefore, if we have anything to calculate on from a financial view of the question. Hence my conclusion that nothing short of necessity, arising from their fears as to the consequences, will force them to act. Allow me now to present the view I ventured to hint at some short time since. In Mr. Forsyth's instructions to Mr. Vail-15th July, 1840, No. 2—is to be found the following very strong language: "You are authorized to assure the Spanish government, that in case of any attempt, from whatever quarter, to wrest from her this portion of her territory, (Cuba,) she may securely depend upon the military and naval resources of the United States to aid her in preserving or recovering it." This assurance was accordingly given by Mr. Vail, and again repeated by Mr. Irving, under his instructions from Mr. Webster. With this guarantee for the safety of the island, the Spanish government has rested in perfect security. At the time of Mr. Bulwer's dismissal, when the public apprehended a rupture with England, it was a common remark at the Puerta del Sol-the great theatre for political discussion-" that the United States would aid us in the protection of Cuba." Now, whilst I would not formally withdraw this assurance, I suggest the propriety of changing our tone by saying, "In a war between Spain and England the United States might feel greatly embarrassed, from her friendly relations with England; that she is not only our ally, with whom we are at peace, but with whom, at present, we have the most intimate commercial relations; that whatever we may think of her colonial policy, in the extension of her commerce and for the advancement of her manufactures, the United States would feel great reluctance in an open rupture with her at this time: besides, she might claim from us the same neutrality in a war with Spain as she had observed in our late contest with Mexico." This language might do good; and, as I think, could do us no harm. And whatever might be our secret resolution-that under no circumstances could we allow Cuba to come under the control of England—still it might be as well for us to keep this resolution to ourselves. In my interviews hereafter with the minister I shall venture to present this view of the subject, as a reason why we should greatly prefer the purchase of Cuba to any interference to prevent its falling into the power of England. I have thus given you a full account of what has taken place since the reception of your despatch-of the difficulties which surround the subject, of my prospects, and of the course I design to pursue in regard to this interesting subject. I feel highly flattered in having confided to me a trust in whose successful execution I should connect my name with one of the most important events in our diplomatic history. I am, sir, most respectfully, your obedient servant, JAMES BUCHANAN, Esq., R. M. SAUNDERS. Secretary of State. Mr. Saunders to Mr. Buchanan. [No. 38.] LEGATION OF THE UNITED STATES, SIR: I reached here this morning from La Granja, and was somewhat surprised to find the gentleman who had engaged to carry my despatch to Liverpool had not yet left, but expects to do so to-night. It is perhaps as well, as it enables me to add information on the subject of a more definite character. On the 15th instant I had an interview with the Minister of Foreign Affairs, in which I was more explicit in my communication, and he more candid in his reply. I repeated the interest which the United States felt in the present and future condition of Cuba, and the belief of the President that possibly the existing state of things might render it desirable for her Majesty to enter into negotiations on the subject. He said he had been informed by General Narvaez of the nature of my communication to him, and of my authority; that, if I wished to press the matter further at this time, he should like to hear whether I proposed to treat for the cession of Cuba to the United States, or for its security to Spain; and, in the event of a difficulty with England, whether Spain could rely for any aid from the United States. I answered that it was from the fear of a difficulty with England, and the threat on her part to seize on Cuba, which had, part, induced the President to give me the special authority he had done at present; that, as his excellency would see, an open rupture between Spain and England-the allies of the United States-might greatly embarrass her as to the part which she, as a neutral, might find it necessary to take: that, whilst self-preservation and the interest of her commerce might prevent her from remaining passive in the event of any pressing danger, she would greatly prefer a direct purchase of Cuba, to involving herself in a war with England on that account. He said he fully understood our difficulty; that, from the present state of things, he did not anticipate anything of the kind; that it was but candid in him to say, he could not hold out any prospect at present of a cession; that possibly time might bring it about. Cuba was reported to them as being secure, but there was no telling how long it might remain so. He was pleased to receive my communication; should treat it as entirely confidential; and if anything should occur to produce a different state of things, he should not fail to inform me of it. in The above is, in substance, what transpired. I did not deem it prudent to urge the matter further at this time, but shall not fail to keep myself fully informed of everything which may occur, and should I see the least prospect of success, shall, of course, avail myself of it. You may possibly see in the English papers some reference to the relations with Spain, and the anxiety on the part of the latter to have these matters accommodated. I doubt if this be so. At least, I am certain General Narvaez has manifested no anxiety on the subject. Señor Mon has just come into the cabinet as Minister of Finance. He is the brother-in-law of the Minister of State; is the peculiar friend and partisan of Christina; is reported an honest man, and, from his character, is likely to improve the moneyed matters of the country. The calculation is, that he and Narvaez may not continue to act very long with much harmony. I doubt if he is likely to contribute anything to my success in regard to Cuba. I have received from the Minister of State the note, a copy of which I enclose, inviting me, as you will see, to be present at the accouchement of the Duchess of Montpensier. As I found most of the diplomatic corps intended going, I deemed it proper for me to accept, and shall go off within a few days. This may seem rather a ridiculous matter to us, but, as you know, is considered a necessary ceremony among the regal families of Europe. I have been given to understand my prompt acceptance was quite gratifying, both to the Queen and her mother. I trust, therefore, in the absence of any direct instructions, the President will approve of my course. I am, sir, very respectfully, R. M. SAUNDERS. JAMES BUCHANAN, Esq., &c., &c., &c. [No. 42.] Mr. Saunders to Mr. Buchanan. LEGATION OF THE UNITED STATES, SIR: There appeared in the New York Herald of the 20th October, a letter purporting to be from a Madrid correspondent, and to have been written by an American. It reflects in no very polite terms on this legation, and refers to negotiations which the writer assumes as pending for the cession of Cuba to the United States. These statements, with the editorial of the Herald, have been copied into the English and French papers, and, as you will see from the enclosed articles, have been noticed by the press here. I deemed it proper to call on the Minister of Foreign Affairs, and to assure him the matter had found its way into the press without any authority from anything done or said on the part of myself or the secretary of this legation. He said he had no suspicion of anything of that kind, but supposed it a trick of the newspaper editors, or of some one, for the purpose of mischief; that it was somewhat annoying, as it was calculated to produce a bad effect in their colonies. I assured him I had taken steps to have the matter set right at home, and to find out, if I could, the author of the letter. He expressed himself as satisfied, and the matter dropped. You will see, from the articles enclosed, the spirit in which the question of the cession is received, and the feeling of the public on the subject. It is certain they regard Cuba as their most precious gem, and nothing short of extreme necessity will ever induce them to part with it. There are some statements in the publication which I feel called upon to notice. It is utterly untrue that I have ever found it necessary to consult any one unconnected with the legation, in my intercourse with the government. On the contrary, most of the secretaries of foreign affairs since my being here have spoken English, and I have at no time been embarrassed on that account, as the Under-Secretary is a good English scholar. So the statement does great injustice to Mr. Sawyer, as he is a good French scholar, speaks it well, and is fully qualified to converse in and to translate the Spanish. I regret to say, these references, with other allusions in the letter, have excited my suspicions as to the author. In this I may be mistaken. I deem it proper to inform you, as the letter refers to negotiations which the writer says took place during the mission of my predecessor, I felt at liberty to write to Mr. Irving, requesting him to say to Mr. Bennett the statements in the letter were false, and to endeavor, if practicable, to find out its author. You can, therefore, if you should see fit, communicate direct with Mr. Irving, or await his answer to my letter. If my suspicions as to the author of the letter shall prove to be well-founded, he certainly deserves to be exposed; if unfounded, then it will give me pleasure to have them removed. I have had no encouragement to renew the subject in regard to Cuba; so far as I have been able to collect the opinion of the public, it is against a cession, and I do not think the present ministry could or would venture on such a step; both Pidal and Mon are against it, and Narvaez says nothing. As I considered this a favorable opportunity to renew the subject, I remarked to the minister he must excuse me for again calling his attention to the matter of the cession of Cuba; that an impression had been produced in the United States, in consequence of some recent publications on the subject, that Spain might be induced to make the transfer, if terms sufficiently liberal should be offered; and I desired to know if he was willing to hear anything further on the question. He answered, he had understood, from our former conversations on the subject, that I had not been instructed to make any direct proposition for the cession, but was authorized to enter into negotiations whenever it |